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12/09/94 GEORGE MARTIN v. FEDERAL LIFE INSURANCE

December 9, 1994

GEORGE MARTIN, PLAINTIFF-APPELLEE,
v.
FEDERAL LIFE INSURANCE COMPANY (MUTUAL), DEFENDANT-APPELLANT.



Appeal from the Circuit Court of Cook County. Honorable Richard J. Elrod, Judge Presiding.

Released for Publication January 13, 1995.

Justice McNULTY delivered the opinion of the court: Cousins, P.j. and Gordon, J., concur.

The opinion of the court was delivered by: Mcnulty

JUSTICE McNULTY delivered the opinion of the court:

Plaintiff George Martin brought this breach of contract actionagainst his former employer defendant Federal Life Insurance Company (Federal). The jury returned a verdict in favor of plaintiff and awarded him damages in the amount of $260,000. Defendant appeals, seeking judgment n.o.v. We affirm.

Plaintiff began working for Federal in 1954 as personnel manager. Throughout the next 22 years, plaintiff received various promotions including director of personnel and purchasing, assistant vice president, second vice president and senior officer. In 1976, Martin was promoted to vice president and in February of 1977, he was reelected as vice president.

Plaintiff testified that in July 1967, he received an offer which included a salary increase, better benefits, and a better opportunity for advancement from Franklin Life Insurance Company, in Springfield, Illinois. Before accepting the offer, plaintiff met with Federal's then Executive Vice President and General Counsel, Anderson Williamson, at Williamson's home. Williamson died in June 1977. Therefore the trial court ruled that in accordance with the Dead Man's Act, plaintiff could not introduce evidence of what was said in his meeting with Williamson, and defendant could not infer what was not brought up at the meeting. Martin testified that after receiving the offer from Franklin Life, he also met with Anthony Ventura, a second vice president and statistician with Federal at the time. The day after Martin's meeting with Williamson, and also after meeting with Ventura, plaintiff called Franklin Life and declined the job offer. Martin stated that his decision about whether to accept the position at Franklin Life was affected by what happened between the time he left Franklin Life in Springfield on Sunday and the time he turned down the offer several days later. There was no evidence to suggest anything else, other than Martin's meeting with Williamson, could have affected his decision to remain at Federal. Martin continued his employment at Federal until March of 1977. On March 22, 1977, Federal terminated plaintiff's employment without cause. Plaintiff was not accused of any wrongdoing, poor performance or incompetence.

Ventura testified that he had been asked by Williamson to try to convince Martin to stay with Federal. According to Ventura, Williamson told Ventura, "I can't make him any promises such as promotions or increases in salaries, but I can promise him a job." Ventura testified that Williamson said that Martin could "rest assured that he would have continual employment" and Martin "could have a job as long as he wanted." Ventura stated that Williamson "guaranteed" Martin's job. Ventura testified that he talked to Martin and relayed to Martin the promises made by Williamson. A day or so after Martindeclined the Franklin Life job offer, Martin, Ventura and Williamson and their wives all had dinner together to celebrate Martin's decision to stay with Federal. The testimony of other Federal employees revealed that the company's personnel practice was not to fire without good cause and that other employees had been promised lifetime employment.

Based on this evidence, the jury returned a verdict in favor of plaintiff and awarded him damages of $260,000. Defendant claims that plaintiff failed to prove one or more of the necessary elements of an oral contract for permanent employment and therefore judgment n.o.v. should be granted. Judgment notwithstanding the verdict may not be granted unless all of the evidence, when viewed in the light most favorable to the opponent, so overwhelming favors the movant that no contrary judgment can stand. Pedrick v. Peoria & Eastern R.R. Co. (1967), 37 Ill. 2d 494, 229 N.E.2d 504.

This is the third appeal in this case. In Martin v. Federal Life Insurance Co., (1982), 109 Ill. App. 3d 596, 440 N.E.2d 998, 65 Ill. Dec. 143, (Martin I), the court reviewed the facts alleged in plaintiff's complaint, which essentially are the facts that were proved at trial, and reversed the trial court order dismissing plaintiff's complaint. The court in Martin I held that when an employee gives up another offer in exchange for and in reliance upon the employer's promise of permanent employment, that contract, if proved is enforceable. The court explained that sufficient consideration existed because the employer agreed to relinquish his right to terminate plaintiff at will in exchange for the retention of a valued employee who was about to join a competing firm. If the parties bargained for and exchanged such promises, the consideration element would be satisfied. The court in Martin I determined that the allegations in plaintiff's complaint if proved would support a finding that an oral contract for permanent employment had been formed between Martin and Federal.

In Martin v. Federal Life Insurance Co. (1987), 164 Ill. App. 3d 820, 518 N.E.2d 306, 115 Ill. Dec. 781, (Martin II), the court reversed the summary judgment order that had been granted in defendant's favor. After Martin I was remanded for further proceedings, Federal asserted for the first time that plaintiff's alleged employment contract was void and unenforceable under a provision of the Insurance Code. The trial court agreed and granted Federal's motion for summary judgment. On appeal, the court in Martin II reversed the summary judgment order, stating that under the law of the case doctrine, Federal could not rely on the Insurance Code for the first time on remand to the trial court after the appellate court decided the law of the case. In this third appeal, Federal urges us todetermine as a matter of law that the evidence at trial failed to meet the requirements of an oral contract for permanent employment. To be valid, an oral contract for permanent employment needs to contain a clear and definite agreement and be supported by sufficient consideration. ( Koch v. Illinois Power Co. (1988), 175 Ill. App. 3d 248, 529 N.E.2d 281, 124 Ill. Dec. 461.) Federal claims that the evidence adduced at trial as a matter of law did not show either a clear and definite offer or valid consideration.

The issues of whether Williamson's statements regarding permanent employment can constitute a clear and definite promise of permanent employment and whether refusing another offer of employment is sufficient consideration, have already been determined as a matter of law in Martin I. Those pronouncements became the law of the case and we are precluded from reconsidering the issues of law decided in Martin I. The law of the case doctrine provides that a question of law decided on a previous appeal is binding on the trial court on remand as well as the appellate court on a subsequent appeal. ( People v. Lyles (1990), 208 Ill. App. 3d 370, 567 N.E.2d 396, 153 Ill. Dec. 438; Gord Industrial Plastics, Inc. v. Aubrey Manufacturing, Inc. (1984), 127 Ill. App. 3d 589, 469 N.E.2d 389, 82 Ill. Dec. 855. There are two exception to the law of the case doctrine. The first exception is when a higher reviewing court, subsequent to the lower reviewing court's decision, makes a contrary ruling on the same issue. The second exception allows the reviewing court to depart from the doctrine of the law of the case if the court finds that its prior decision was palpably erroneous, but only when the court remanded the case for a new trial on all issues. ( Stallman v. Youngquist (1987), 152 Ill. App. 3d 683, 504 N.E.2d 920, 105 Ill. Dec. 635.) The rationale is that the appellate court, on the second appeal, actually would be reaching a different decision based on a new and different trial. Neither of these exceptions is applicable here.

The supreme court has yet to determine the necessary requirements for the establishment of a permanent employment contract. Therefore, the first exception to the law of the case doctrine is inapplicable. Federal claims that the second exception applies because the decision in Martin I is palpably erroneous. We do not believe that Martin I was palpably erroneous either at the time it was decided or under the current state of the law.

At the time Martin I was decided, two cases, Heuvelman v. Triplett Electrical Instrument Co. (1959), 23 Ill. App. 2d 231, 161 N.E.2d 875, and Molitor v. Chicago Title and Trust Co. (1945), 325 Ill. App. 124, 59 N.E.2d 695, had previously addressed oral contracts of permanent employment. In Heuvelman, the plaintiff turned down an offerfrom a competitor's firm based on his employer's statement that "their arrangement was a permanent one." The court found that foregoing another employment opportunity is insufficient consideration to support a promise of permanent employment. In Molitor, a contract for permanent employment was upheld where the defendant specifically requested plaintiff to give up his law practice in New York and move to Chicago in exchange for permanent employment with defendant. Significant in the Molitor court's determination that there was sufficient consideration, was the fact that the plaintiff gave up alternative employment in exchange for a promise of permanent employment. In Martin I, the court determined that if plaintiff gave up ...


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